Bridging volumes expected to rise in 2020

Bridging Finance

The specialist finance of bridging is expected to increase its volumes in 2020, thanks to political certainty.

The results of the election in December 2019 has filled both investors and developers with new found confidence going into the new year.

A survey carried out by Avamore Capital showed a 66% majority of developers were more likely to purchase property in 2020, compared to 2019.

With steady house prices and a potential increase expected, along with political stability, it is a good time to borrow money and invest in the development of a property.

The bridging loan industry is currently valued at £7 billion per year

and there are an estimated 60 bridging lenders in the United Kingdom and hundreds of brokers that service them with enquiries.

Bridging loans and similar sources of specialist finance, such as development and mezzanine, and often used as an alternative to traditional banking finance and avoiding property chains.

Bridging loans are often used as a way of purchasing something within a tight deadline and then repaid over 12-18 months upon the point of sale. According to MTF, popular uses including buying property at an auction and completing on a property whilst waiting for another to sell.

This source of funding has both residential and commercial uses, for both businesses and homeowners.

On a business level, it can be used as a way to access fast funds before new funds become available. In recent news, the German government granted the airline Condor a 380 million euro (£320 million) bridging loan to keep it going through the winter and give it time to find a new investor after British owner Thomas Cook collapsed in September.

The lowest rates available from specialist finance companies are 0.43% and range from £25,000 to £100 million. The average loan duration is 12 to 24 months.